A company purchases a remote site building for computer operations. The building will be suitable for operations after some expenditures. The wiring must be replaced to computer specifications. The roof is leaky and must be replaced. All rooms must be repainted and re-carpeted and there will also be some plumbing work done. Which of the following statements is true?
A) The cost of the building will not include the repainting and re-carpeting costs.
B) The cost of the building will include the cost of replacing the roof.
C) The cost of the building is the purchase price of the building, while the additional expenditures are all capitalized as building improvements.
D) The wiring is part of the computer costs, not the building cost.

Question

Quizplus · Accepted Answer

The cost of the building includes the cost of replacing the roof because it is a necessary repair to make the building suitable for its intended use, and such costs are capitalized as part of the building cost.

A Company Purchases a Remote Site Building for Computer Operations